Today's Must Read
Cost Savings Aid PNC, High Exposure to Commercial Loans Ails
SAP Rides on Cloud Initiatives & Growth in S/4HANA Platform
Wednesday, August 29, 2018
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Visa (V), PNC Financial Services Group (PNC) and SAP SE (SAP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Visa’s shares have outperformed the Zacks Financial Transaction Services industry over the last year (+39.9% vs. +34.8%). The company is witnessing growth in payments volume, cross-border volume and processed transactions owing to a strong economy and a positive consumer sentiment driving higher spending.
Numerous strategic acquisitions and alliances, technology upgrades and effective marketing have paved the way for long-term growth and consistent revenue rise. Visa is well poised to gain from the growing electronic payment processing and a strong international business.
Given solid operational performance, management expects fiscal 2018 operating EPS to grow in low-30s on low double digits revenue growth. A solid balance sheet ensures effective capital deployment. Nevertheless, high client incentives might put pressure on revenues.
Shares of PNC Financial have underformed the Zacks Major Regional Banks industry over the last six months, decreasing -6.3% vs. -0.1%. Yet, the company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters.
The Zacks analyst remains encouraged by the company’s efforts to generate positive operating leverage through its cost-saving initiatives. Also, its focus on enhancing shareholders’ value through strategic acquisitions is encouraging. Further, efforts to expand middle market lending franchise and investments in digital products and services bode well for the company.
Moreover, Fed's approval of 2018 capital plan depicts the bank's financial stability. However, PNC Financial’s exposure to risky loan portfolio remains a concern.
Shares of SAP have outperformed the Zacks Computer Software industry in the past six months, gaining +19.6% vs. +17.4%. SAP’s resilient Cloud and Software business, an enviable business network spread and dominance over critical client demand areas continue to act as staple growth drivers.
Solid adoption of SAP’s Human Capital Management (HCM) solution, SuccessFactors Employee Central and S/4HANA platform are expected to increase new cloud bookings, consequently bolstering top line. The company constantly upgrades the existing products and launches fresh ones to expand its customer base, consequently offering a competitive edge over peers.
However, inherent seasonality in clients’ technology spending exposes the company’s sales to risks of quarterly fluctuations. Currency fluctuations are also hurting its financial performance, particularly the Americas region.
Other noteworthy reports we are featuring today include Novartis (NVS), Sanofi (SNY) and Ross Stores (ROST).
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Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>